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Brian Dzyak

STATE FILM SUBSIDIES: NOT MUCH BANG FOR TOO MANY BUCKS

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Oh look, ANOTHER State running the numbers to discover that they are being robbed:

The state’s film tax credit program cost taxpayers $44.1 million in 2011, creating 497 new jobs for Massachusetts residents and sparking $38.7 million in net economic impact, according to a new report from the Department of Revenue.


So let's see.... taxpayers doles out 44.1 million and "sparked" $38.7 million back. That would be a deficit of $5.4 million.

Toss that into the pile with the recent Louisiana audit that found a loss as well.

Please, anyone, tell the class again why tax "incentives" are beneficial to the industry and crew who actually make the movies?


http://realfilmcareer.com/report-details-costs-benefits-of-states-bid-to-lure-film-industry/

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BTW, According to the Michigan Fin report for 2012 Revenues of 56.1 Billion exceeded expenses of $51.8 billion.

 

Pg 16

 

http://www.michigan.gov/documents/budget/CAFR_FY_2012_413282_7.pdf

 

Assuming Michigan spent 50 billion in 2010, film incentives to Disney cost .0008% of the provincial budget. So, if roads aren't being looked after. If sewers are falling apart. The problem isn't overspending on the Arts.

 

Funny how people are so quick to pull out the infrastructure canard when talking about arts funding, but nobody ever questions spending on incentives for other industries. eg computer, manufacturing etc.

 

Obviously, cities/States/Nations have economic difficulties that are multifaceted. "Arts" spending is but a small part of the puzzle. It's hardly a "canard" to point out that it is ridiculous for "governments" to try to play in the movie-making sandbox by bribing movie studios with money they don't really have. There has yet to be ANY government to prove that it's "incentives" actually create a profit as a result of those "incentives." So far EVERY State in the USA which has had an honest audit has shown that their specific "incentives" for film production prove to be at a loss, not a net gain, for their local economies.

 

Naturally, Fascists here and elsewhere will laud "incentives" as "necessary" and proclaim that "They work!" because those at the top profit by squeezing governments and crew in the race to the bottom while profits on the end-product have consistently risen thus increasing payouts for everyone except crew and the governments that were so generous.

 

Someone might have a case to justify an "incentive" for a factory which will employ hundreds of locals for years on end. But the film industry specifically is like a swarm of locusts, moving in to rape a location for whatever it needs it for, then it leaves days or weeks later, never to return. There is promise of long term local employment for things like computers or manufacturing in large factories, but the film industry isn't like that on any level. The comparison is nonsense.

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Brian,

 

Now here's an example of where the marriage of government and the film industry has gone right. And frankly I was the one that started it all. I shot the Dogfather in Parry Sound in 2009. I know none of you have ever heard of Parry Sound, it's a small town, a one hours drive North from my house.

 

Since then there has been a staggering number of features shot there because of it's only 2 hour drive from Toronto airport, and availability of funds from the NOHFC, mentioned in the article. The NOHFC funds are NOT a tax credit, or bribe (as you like to call them) they are an equity program available to Ontario residents only.

 

Would you believe that while I was shooting Against The Wild in Parry Sound last October there were TWO other features shooting there at the same time! And this is a town of only 7, 000! One of the others starred Meatloaf and you'll see the pic of him in the attached magazine article.

 

As I write this there is a Hallmark Channel Christmas movie shooting in Parry Sound right now, called Pete's Christmas. Starring Bruce Dern and Zach Gordon. The benefits to the local economy are obvious and not up for debate. For my two films alone I poured multiple hundreds of thousands of dollars into the local economy. Kinda of cool to think that all those people seen in those Dogfather pictures had employment because of me.

 

I can only attach 2MB of files and I have three pages from this article.

 

R,

 

 

So, you and the other productions have promised to employ locals consistently with weekly paychecks for the next 50 years? Or did you just move in, take what you needed from their local economy, then bolt, taking your profits with you even though BECAUSE of their bribes, you were able to make your product? Shouldn't Parry Sound be a co-producer in that they essentially co-financed your movie? What is the town's cut?

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So, you and the other productions have promised to employ locals consistently with weekly paychecks for the next 50 years? Or did you just move in, take what you needed from their local economy, then bolt, taking your profits with you even though BECAUSE of their bribes, you were able to make your product? Shouldn't Parry Sound be a co-producer in that they essentially co-financed your movie? What is the town's cut?

 

Good luck finding a single Parry Sound resident that doesn't want the film industry in their town!

 

I just pointed, although evidently it was not clear to you, that productions have been on-going since my project in 2009, there is a show in there now, and one more coming right behind this one. I've been there TWICE.

 

Please don't tell me that there is anything anywhere in the film industry were people work M-F, 9-5, 52 weeks a year, at a job in feature filmmaking. You are fully aware that film jobs are free-lance no matter where they take place in the world.

 

How do we take what we need and then bolt? We leave the money BEHIND. You seem to be of the opinion that hotels and restaurants simply give their food and lodgings away to film crews for free!

 

Oh BTW, Toronto Star reported today that the Toronto film industry set a new record for production volume in 2013. Blowing Vancouver, New York, & Louisiana, right out of the water.

 

From page E9 of the Entertainment section:

 

"Wayne Goodchild, president of IATSE local 873, said times have never been better for its 1,000 members....we had a record year not only in terms of the number of productions we had under contract but a record year in terms of the amount of money our members earned-the gross wages of our members. We've never had a better year than last year (2012)." Goodchild said.

 

Gee Brian aren't you a member of IATSE? What do you have to say to your brothers and sisters in 873?

 

R,

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Go get em' Brian, they are a bunch of job thieves! And they are right in your own country, never mind Canada:

 

http://www.bbc.co.uk/news/magazine-21377625

 

R,

 

 

Louisiana. According to this article, Louisiana paid out 231 million in state subsidies to the film industry in 2012.

 

http://www.nola.com/politics/index.ssf/2012/08/film_tax_credits_cost_state_to.html

 

According to this budget report, Louisiana had a 25 billion dollar budget.

 

http://sunshinereview.org/index.php/Louisiana_state_budget

 

That equals .00924 percent of the budget AND the State is getting some or most of that money back depending on who you talk too.

 

In the above article slamming the tax credit we get this all too familiar quote:

 

"It'll be a way for Louisiana to reinvest in education and health care and other areas that have really suffered over the past four years from consecutive budget cuts."

 

Hmmmm...a .00924 percent budget cut is really going to make any kind of difference in the Health Care and Education? PLUS other areas???? I don't think so.

 

This is all hyperbole and propoganda. Keeping the readers in the weeds, but no perspective from the big picture. Let's get honest here and quit with the hidden agendas.

Richard are you calling people that live in Louisiana job stealers?

 

And Pat do you live in Louisiana? Do see what the film industry has done for the area?

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My post is written tongue-in-cheek, hence the phrase, "Go get em' Brian, they are a bunch of job thieves!"

 

Wasn't that obvious to you?

 

Also, Pat is DEFENDING the film industry in Louisiana, read our posts a little more carefully.

 

R,

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http://realfilmcareer.com/five-reasons-government-subsidies-for-films-are-a-bad-idea/

 

Five Reasons Government Subsidies For Films Are A Bad Idea

http://www.michigancapitolconfidential.com/18456

Politicians help Big Hollywood soak

taxpayers for few benefits, much harm

By JARRETT SKORUP

Michigan subsidizes up to 32 percent of expenditures for film, television, music video, video game and other media projects done in the state. Essentially, this means that select qualified ventures receive a check from the state treasury for production.

I recently debated Michigan’s film subsidy program on Fox 2 in Detroit. I gave several reasons why the state should not be spending taxpayer money on this private enterprise. Here they are:

  1. The Michigan film subsidy program does not create jobs. As James Hohman, a fiscal policy analyst at the Mackinac Center for Public Policy reported in 2010, the initial program was signed into law on April 7, 2008. That month, there were about 5,867 jobs in Michigan’s motion picture and sound recording industries. One year before the subsidy went into effect, there were about 6,750 jobs in that area. Two years after the bill-signing, there were about 5,300 jobs in the industry (see chart nearby). It’s true that film production companies tend to use employee-leasing agencies, meaning that the jobs reported by the companies and the film office might show up in another industrial category, but the reality is that despite immense subsidies, Michigan is nowhere close to an independent or sustainable film industry.

    Of course, spending hundreds of millions of dollars on a select sector of the economy may very well mean more jobs for that industry, as is claimed by film subsidy supporters, but analyses that find job creation through subsidizing movies almost always ignore the cost of the program. That is, where that money may have been spent otherwise, whether in the private-sector or on other more worthy government projects like roads.

  2. Virtually no one who has analyzed film subsidy programs across the nation finds them to be worth the cost. The best source for measuring what the program actually brought back to the state in terms of tax dollars is a Michigan Senate Fiscal Agency report from 2010-11. It found an 11 percent return on investment: State spending of $125 million for $13.5 million back. The study also found that nearly half of the film credits left Michigan and had no effect on state economic activity.

    Film subsidies are an area where scholars are almost united across the political and economic spectrum — these programs are not worth the cost. The conservative Tax Foundation has found that movie production incentives “are costly and fail to live up to their promises.” The liberal Center on Budget and Policy Priorities found film subsidies to be ”a classic race to the bottom” and the economic benefits “more fiction than fact.”

  3. The subsidy has led to massive investments in film studios leading to disastrous results. Allen Park paid $40 million for property and improvements of Unity Studios — a movie studio that came to be because of the Michigan Economic Development Corp., the film program and a partner who promised the project would create “at least 3,000 jobs.”

    Fast forward a few years. The studio never happened, taxpayers are on the hook for what may end up being over $100 million, public employees are being asked to take cuts or lose their jobs, the council and the mayor who approved the deal were replaced, and Allen Park now has an emergency manager to try and deal with it all.

    Michigan Motion Pictures Studios, formerly Raleigh Studios, in Pontiac was the site of the recently-released, “Oz: The Great and Powerful.” It needs a continuing bailout from the pension funds of Michigan public employees to meet its bond payments. Under a deal reached between former Gov. Jennifer Granholm and wealthy investors, the state pension funds back the studio, and when those payments weren’t made, the state raided the pensions of teachers, police officers and other state workers to cover the difference. The state has paid $1.68 million so far.

  4. Film subsidy programs are being shut down in other states because of a multitude of problems. According to Bloomberg Businessweek, states have given $3.5 billion in production incentives since 2005. But because of cost concerns, a lack of job creation and other issues, they are starting to cut back. The article reports: “Kansas and New Jersey have suspended their tax credits. Rhode Island has capped subsidies at $15 million annually, and Wisconsin’s are set at a measly $500,000 a year. Arizona’s program is set to expire … Larry Brownell, head of the Association of Film Commissioners International, which represents 41 of the 42 states offering credits, predicts half the states will shelve their programs within a decade.”

    The subsidies have ended in Iowa and a state commission in Missouri recommended repealing its program. Even in Louisiana, which spends the most on films and where support is particularly strong and bipartisan, film office bureaucrats are

    more and more about
    .
  5. Regardless of political beliefs, Big Hollywood teaming up with government should violate the conscience.The majority of film subsidies go to big companies, mostly based in California. In fact, the Michigan Film Office says on its website that large productions are more likely to be chosen. So the Michigan film subsidy program is effectively a direct subsidy from the middle class to the rich; and few outside of a free market think tank are taking the side of regular taxpayers against millionaire actors and actresses and billion-dollar studios.

    Michael Moore could take up the cause, except he benefited from the program. Moore made a film called, “Capitalism: A Love Story,” which, in his words, seeks to expose “the disastrous impact of corporate dominance on the everyday lives of Americans.” Moore has stated repeatedly that he fights for the little guy against special favors for groups from government. In a prominent scene in the film, he stands with a bag on Wall Street and shouts, “We want our money back!”

    But Moore requested and was approved for $1 million from Michigan’s film subsidy program. In the end, according to The New York Times, he received over $840,000 from Michigan taxpayers to film some of the movie in his home state.

By nature, politicians love spending other people’s money, especially on programs with easily seen benefits and lesser seen costs. This explains why it is perhaps unsurprising that the original incentive passed 108-0 in the state House and 37-1 in the state Senate (former Sen. Nancy Cassis, R-Novi, was the only politician to stand against the program).

And many news organizations report almost exclusively on the positive parts of the subsidy while rarely covering the costs.

That’s why spending taxpayer money on movie making is ideal for the major players who influence public opinion. It has the benefit of looking like government is “doing something” to create jobs while at the same time bringing recognizable stars to the state.

But political decisions have real world consequences and the results of the Michigan film subsidy program are almost uniformly bad.

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http://realfilmcareer.com/b-c-urges-ontario-to-harmonize-film-tax-credits/ B.C. urges Ontario to harmonize film tax credits

http://www.thestar.com/news/queenspark/2013/03/27/bc_urges_ontario_to_harmonize_film_tax_credits.html

Meeting of finance ministers from both provinces to discuss re-examining the system.

By: Robert Benzie Provincial

Hoping to end The Hunger Games-like competition among provinces seeking movie productions, British Columbia is pleading with Ontario to harmonize its film tax credits to save both provinces a bundle.

“Calling these things ‘tax credits’ is a bit misleading … they are subsidized incentives,” B.C. Finance Minister Mike de Jong told the Star on Tuesday.

“They’re playing the taxpayers off one against the other,” de Jong said after a meeting with Ontario Finance Minister Charles Sousa in Toronto.

“The first step is to stop being whipsawed for one another because that’s just crazy.”

It’s expected to cost B.C. around $330 million this year to help bankroll film production in the province; the tab for Ontario’s industry could ultimately be three times that when all factors are considered.

While Sousa said he had “a great session” with de Jong and confirmed the government would likely re-examine the system, nothing radical is imminent.

“I am not at this point looking at changing our investment tax credits for the film industry,” the treasurer said at Queen’s Park.

“Ontario has become very attractive for the film industry because of the investment tax credits we’ve provided.”

Sousa is tabling his first budget as finance minister next month.

But with roughly a third of the minority Liberal government’s seats in Toronto, home to the lion’s share of Ontario film production, it would be politically imprudent to reduce tax credits.

Since being elected in 2003, the Liberals have continually enriched tax credits to match or undercut other jurisdictions, such as Quebec and numerous American states.

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"The article reports: “Kansas and New Jersey have suspended their tax credits. Rhode Island has capped subsidies at $15 million annually, and Wisconsin’s are set at a measly $500,000 a year. Arizona’s program is set to expire … Larry Brownell, head of the Association of Film Commissioners International, which represents 41 of the 42 states offering credits, predicts half the states will shelve their programs within a decade.”

 

Music to the ears of the film industry in Ontario! The more chaos in the US, leads to more work shifting to Ontario and it's 100% stable tax credit system!

 

R,

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“I am not at this point looking at changing our investment tax credits for the film industry,” the treasurer said at Queen’s Park. “Ontario has become very attractive for the film industry because of the investment tax credits we’ve provided.”

Yep, no need for Ontario to change a thing. BC and the US states will just have to learn to compete.

R,

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Audit: Film tax credits cost state millions

 

 

 

 

 

http://www.wwl.com/pages/15932821.php?contentType=4&contentId=12714649

Don Ames Reporting

Governor Jindal’s new tax plan proposal has Hollywood South concerned, with some in the industry fearful that changes in the state’s Motion Picture Investor Tax Credit program could bring the booming business to an end.

The tax credits, begun in 1992, have made Louisiana a favorite for film companies over the past decade, and one of the hottest locations for TV and movie making outside of Los Angeles and New York.

Under the state program, companies can obtain a tax credit for up to 35 percent of the money they spend while broadcasting or filming in Louisiana.

But, a recent 5-year study by the state Legislative Auditor’s office says the state’s many tax rebates and tax credits across several industries, including movies and TV shows, have cost Louisiana some $6 billion.

The Executive Director of the Louisiana Office of Entertainment Industry Development, Chris Stelly, says that report is not quite accurate.

“The report spoke to all exemptions and tax credits that the state administers, across the board.” says Stelly. “So, the film industry does not cost the state $6 billion dollars. I think that number was right around $500 million or $550 million over the course of five years.”

And, Stelly says the report did not focus on economic impact, which he says is just as important.

“Every tax dollar that we issue in the form of a tax credit generates about six dollars to the economy,” Stelly says. “So you’re looking at, over that course of five years, well over a billion dollars in economic impact to the state.”

In fact, Stelly says the economic impact could well be a billion dollars a year, on average.

State Auditor Darryl Purpera says tax credits during the 5-year period accounted for the loss of $5.4-billion from state coffers. He says tax rebates account for more than $730-million in revenue losses. And, he says a healthy portion of the losses are from the state’s film and TV tax incentives.

However, he admits the audit didn’t look at their merits or the economic stimulus the film industry may have generated.

A proposed plan by the Jindal administration would impose a cap on the amount that can be written off for actors’ salaries at $1 million per person and not allow certain film production costs to be covered by the program. There is currently no cap on actors’ salaries.

That cap, it’s feared, could make Louisiana less attractive to do larger productions which might move to competing states, like Georgia.

The Celtic Media Center in Baton Rouge and Second Line Stages in New Orleans were built to service large-budget productions.

It’s estimated that around 14,000 people work in the film industry in Louisiana.

A Change.org campaign to protect the state’s film industry tax credit program has gained support from more than 1,500 industry workers and supporters, including movie extras, set electricians and technicians.

The tax credit change could very likely jeopardize plans for a $50 million film production campus in Algiers.

Louisiana Economic Development secretary Stephen Moret has said the Jindal administration is committed to the film industry and the proposal would have “a negligible impact” on many of the productions.

The legislature will consider the governor’s tax proposal in its upcoming session. If approved, it would take effect on January 1.

“I certainly don’t see anyone pushing to eliminate the Motion Picture Incentive Program altogether,” says Stelly. “There’s some ideas out there, and there are some reform measures taking place. We’ll just see where it goes.”

There are several projects in varying stages of production in New Orleans right now.

The feature film ‘Heat’ starring Jason Statham and Sofia Vergara begins shooting in New Orleans today, April 1st, and will be in town for 8 weeks.

Other projects currently in pre-production and/or filming in and around New Orleans include:

Fox feature film “Dawn of the Planet of the Apes” starring Gary Oldman, Keri Russell and Jason Clarke, until July 14.

Fox feature film “Devil’s Due” starring Zach Gilford and Allison Miller, through May 1.

Mandalay Pictures’ feature film “When the Game Stands Tall” for 7 weeks.

AEI’s feature film “The Kennedy Detail” for 6 weeks.

An HBO Entertainment’s television series currently going by “Untitled Detective Project,” starring Matthew McConaughey and Woody Harrelson, is shooting until June.

ABC Studios television pilot “Reckless” has just concluded filming in New Orleans.

Independent feature film “Jingle Doggie” is slated to begin shooting in May.

 

 

 

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Thanks, music to the ears of the Ontario film industry. If they get cancelled in Louisiana, it just means more more work will shift here.

 

R,

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"However, he admits the audit didn’t look at their merits or the economic stimulus the film industry may have generated."

 

Oooops, just a minor oversight.

 

R,

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Here in Ohio, we have a pretty nice film credit program. I am going on memory of details, so bare with me here. I credit is refundable, and amounts to 35% of all in-state production expenses. The caveat though - you must spend at least $500,000 in the State. Well, there is the problem. $500,000 is more than most Indie films can shoot with. Hollywood films could afford it, but would choose to save more money by going to a State (or Country) with even better tax incentives. With this, I highly doubt that the credit is used very often and it certainly does not "increase employment" very much in our State, of that I'm pretty well certain.

 

My opinion on the whole tax credit thing is this: They are great, if your production is big enough the meet the minimums. However, if your production IS big enough, should we REALLY be refunding money? Seems to me like Hollywood can afford it.

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However, if your production IS big enough, should we REALLY be refunding money? Seems to me like Hollywood can afford it.

 

Good point, you should see the size of the "refunds" being handed out to America's oil & agricultural industries. Those guys make the film industry look like amateurs!

 

R,

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Memo claims NC film incentives brought in less jobs than expected

 

http://realfilmcareer.com/memo-claims-nc-film-incentives-brought-in-less-jobs-than-expected/

 

 

http://www.wect.com/story/21947108/general-assembly-memo-claims

By: Jon Evans

WILMINGTON, NC (WECT) – A memo generated in the North Carolina General Assembly says the state’s Film Incentive Tax Credit has not generated as many jobs as many people thought.

The memo, generated in January and delivered to Senator Bob Rucho (R-Mecklenberg) by the Fiscal Research Division of the Legislative Services Office, comes in the form of an eight-page memo.

[Click here to read the memo in its entirety]

The findings show “the Film Production Credit likely attracted between 55 and 70 new jobs to North Carolina in 2011, which is 290 to 350 fewer jobs than would have been created through an across-the board tax reduction of the same magnitude.”

The report goes on to say “However, as there is no way to directly measure the economic impact of the Film Credit, the REMI model provides an informed estimate of how the Film Credit impacts business activity in North Carolina.”

The memo explains that “the Regional Economic Models Incorporated (REMI) PI+ model…. estimates how the economic system would react to changes in the policy environment, so the results are only estimates.”

The memo does not show any figures or statistics from 2012, when several large productions began shooting in southeastern North Carolina, including Iron Man 3, Safe Haven, and the NBC show Revolution.

“The report doesn’t reflect what is happening in North Carolina’s Film Industry,” said Aaron Syrett, the Director of the North Carolina Film Office. “The film industry put about 4,000 North Carolinians to work as well paid highly skilled crew members and actors, in addition to 22,000 as film extras. In 2012 the industry spent $376 million directly in our local communities.”

Johnny Griffin, head of the Wilmington Regional Film Commission, said the study did not rely on date from the North Carolina Department of Revenue, which audits all projects that film in the state.

Griffin said the proof is in the numbers.

“We’ve seen production go from in 2010, $43 million dollars being spent to last year about $247 million being spent here,” he said. “So, the incentives have done exactly what they were meant to do which was to bring productions to the area.”

Griffin said it isn’t clear where the numbers used in the study are from and that local and state film leaders weren’t consulted as part of the report.

“There are hundreds of people who work in the area every day,” he said. “I can show you one project alone that created $15 to $20 million in payroll. To read in a report that they can only show $2 to $3 million in wages that have been created, I don’t know where that information is coming from. It just doesn’t make any sense.”

He said if state leaders are planning on stopping the incentive program, it would harm the local economy.

“If the incentives were to go away altogether, basically, the majority of the film business would just leave,” he said.

North Carolina’s Film Tax Incentives are set to expire on January 1, 2015 according to the NC Film Office.

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http://realfilmcareer.com/film-industry-doesnt-need-more-tax-dollars/

 

 

Film industry doesn’t need more tax dollars

http://www.vancouversun.com/entertainment/movie-guide/Film+industry+doesn+need+more+dollars/8226304/story.html

If credits are the only thing bringing the productions here, we can’t afford to keep enticing them
VANCOUVER SUN
Shakedown, The Sequel, was previewed in B.C. this week as NDP leader Adrian Dix announced that if he becomes premier he will surrender to the latest in a series of escalating demands from the film industry.

Eight years ago in this space, we compared the way the film industry plays off jurisdictions against one another as the financial equivalent of the casting couch.

Just how far are British Columbians willing to go to match the inducements flaunted by Ontario, Quebec and countless other cities, counties, states and countries?

At the time that editorial was written, B.C. was offering film producers a 25 per cent credit for labour costs. In response to a sweetener offered by Ontario, the government here increased that incentive to 33 per cent, where it stands today.

Ontario and Quebec have since increased their subsidy in the form of tax credits worth 25 per cent of all production costs. The industry here is again talking about fleeing the province for greener pastures.

Recently, the provincial government wisely said enough is enough. Community, Sport and Cultural Development Minister Bill Bennett announced some alternative measures to support the industry, but said that we can’t afford any more subsidies.

Dix says an NDP government would sweeten the pot to attract filmmakers with another increase in the tax credit on labour to 40 per cent.

He argues, as does the industry, that we have built up a large skilled workforce in B.C. and significant infrastructure for the moviemaking business and that it is worth keeping.

There is no argument about that.

On its own merits, the film production industry is a great one to have in this province and especially in Vancouver. It is labour intensive and provides good wages, it’s essentially green and it gives the city and the province a good profile beyond our borders.

But the industry doesn’t seem prepared to exist on its own merits. It has quite successfully been able to play one jurisdiction off against another to exact incredible subsidies.

So how far should we be willing to go to keep it here?

The problem with that question is that we know at some point when we are competing on price we will lose out to some other jurisdiction that is more desperate.

In a finding consistent with other jurisdictions that have looked at the issue, Simon Fraser University economist Rhys Kesselman argued recently that at current levels, it is costing B.C. more than $100,000 for each job we save at the current level of subsidy. That’s a terrible deal and raising the subsidy will only make it worse.

It’s time for provinces to get together and decide on a common bottom line. Competing with each other is a fool’s game that is only enriching foreign movie producers at our expense.

That won’t solve the problem of jurisdictions outside our borders that are more desperate for the industry’s attention.

Louisiana offers a tax credit of 35 per cent on all expenditures in the state and the movie business is reportedly booming.

But if price is the only thing that keeps the industry here, it’s an industry that we can’t afford to keep, no matter how much we like rubbing shoulders with the stars.

It’s past time to call the industry’s bluff.

 

 

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Here in Ohio, we have a pretty nice film credit program. I am going on memory of details, so bare with me here. I credit is refundable, and amounts to 35% of all in-state production expenses. The caveat though - you must spend at least $500,000 in the State. Well, there is the problem. $500,000 is more than most Indie films can shoot with. Hollywood films could afford it, but would choose to save more money by going to a State (or Country) with even better tax incentives. With this, I highly doubt that the credit is used very often and it certainly does not "increase employment" very much in our State, of that I'm pretty well certain.

 

My opinion on the whole tax credit thing is this: They are great, if your production is big enough the meet the minimums. However, if your production IS big enough, should we REALLY be refunding money? Seems to me like Hollywood can afford it.

 

Yep. No large Corporation needs a "tax incentive" to operate. It is just a give-away, Corporate Welfare, and a vehicle being used to blackmail cities/States/nations against each other to see who is willing to hand over the biggest bribe.

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"It’s time for provinces to get together and decide on a common bottom line."

 

This amounts to nothing more than price fixing. When companies do this, they get into trouble big time!

 

I'm supposed to accept that it would be ok for Canadian provinces to engage in this practice? Rubbish.

 

There is no way in Canada that Quebec would ever agree in 10, 000 years to co-operate with the other provinces on this issue, so the point is dead before the pistol fires.

 

R,

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"Competing with each other is a fool’s game that is only enriching foreign movie producers at our expense."

 

Also nonsense. What about the substantial number of Canadian productions that use the tax credits? Productions like mine.

 

I quite appreciate the tax credit system because it means that a small time producer like me can actually get a movie made. Otherwise movies would be the sole playground of the Hollywood studios and super rich individuals.

 

Imagine having to raise "just" 1 million dollars to make a movie, where would you go?

 

I'm quite confident that I am the only member of this board who has independently raised seven figure budgets to make movies with.

 

R,

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What about government film funding agencies like TeleFilm Canada? They provide a cash investment into Canadian film. Which is different from a tax credit.

 

What about the National Film Board Of Canada (NFB). Should it be shut down as well?

 

Dozens of countries all over the globe have national film funding agencies.

 

R,

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“However, as there is no way to directly measure the economic impact of the Film Credit, the REMI model provides an informed estimate of how the Film Credit impacts business activity in North Carolina.”

 

Gee really? DUH. These guys all seem to have the same inability to review both sides of this issue.

 

R,

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Milke: Lights! Camera! Massive film subsidies!

 

 

http://www.calgaryherald.com/opinion/columnists/Milke+Lights+Camera+Massive+film+subsidies/8237043/story.html

BY MARK MILKE, CALGARY HERALD

There is apparently no shortage of politicians with a not-so-secret Hollywood love affair: They love to throw tax sweeteners and direct subsidies at the film industry, this in an effort to lure film production to their province or state.

The latest starry-eyed politician is the British Columbia opposition leader, Adrian Dix. In his run-up to that province’s May election, the B.C. NDP leader has promised to up the film tax credit for labour costs to 40 per cent, up from 35 per cent.

Dix is hardly the first politician to swoon over starlets.

In Ontario, after a tax credit fight with British Columbia in the middle of the last decade, Ontario sweetened various incentives for film. At present, its film and television tax credit covers 35 per cent of labour costs; the Quebec credit is set at 45 per cent.

Both provinces, B.C. and most others also offer a plethora of additional film tax credits for total production costs.

Meanwhile, in Alberta, the film industry has pressed the provincial and federal governments to pony up $13 million and $5 million respectively for a proposed $32-million film studio in Calgary. The city has already committed $10 million in property taxes for the studio.

Do the math and taxpayers would pay for most of the $32-million cost.

Such corporate welfare games, whether direct or in tax credit drag, are costly for taxpayers. But you wouldn’t know it from the politicians and industry proponents.

In Alberta, the film industry claims that for every buck in direct taxpayer subsidies, a 10-fold return in economic activity will result. Such crony capitalism for film is then akin to miraculous manna from heaven.

In British Columbia, the NDP claims an upped tax credit will cost the provincial treasury $45 million, but reap $93 million in extra tax revenue.

Perhaps Dix should propose a credit that costs an extra $450 million. If the NDP leader’s math is correct, that should result in an extra $930 million in tax revenues.

Indefensible numbers aside, let’s clear away the fog of misinformation.

Many of the film tax credits available are refundable. That means film companies can wipe away their tax payable and then receive a cheque from the public treasury for the remaining value of the credit.

That’s why, as the Ontario government wrote in its 2012 budget, “such expenditures made through the tax system are, in substance, transfers or grants.”

Such tax credits/grants are costly. Back in 2008, Louisiana taxpayers ended up financing over $27 million worth of incentives for a Brad Pitt film. In British Columbia, the existing film tax credit hit the provincial treasury for $331 million in the last year alone. Rhys Kesselman, an economist at Simon Fraser University, recently wrote that B.C.’s subsidies amount to a taxpayer cost of $125,000 per film job.

Lower taxes on businesses can and do create additional economic activity, as incentives matter.

Plenty of evidence exists on how overall lower business taxes can spur economic growth. But the key is lower marginal rates for everyone, as that influences decisions to save, invest and be entrepreneurial, not cherry-picked tax credits for this or that sector. Such favouritism actually hobbles overall economic growth, it doesn’t help it.

Besides, in a deficit environment which most governments are in, juicier film tax credits mean tax rates for other people and businesses must be kept higher to cover the lost revenue.

As for the claim that taxpayer subsidies for film drive economic growth and more than pay for themselves, a comprehensive 2012 report from the Washington, D.C.-based Tax Foundation found just the opposite: “The best evidence shows that film incentives cost the treasury more than they recoup from taxes on induced economic activity.”

The Tax Foundation pointed out that “aside from studies paid for by economic development authorities and the Motion Picture Association of America, an industry trade association, almost every other study has found film tax credits generate less than 30 cents for every $1 of spending.”

Perhaps American and Canadian politicians could reach some sort of detente and kill their film subsidies all at once. That way, no politician could be accused of chasing away the film industry because incentives are more lucrative somewhere else.

In that world, we’d finally find out where the film industry really cares to shoot. And if that means a film gets shot in Vancouver over Calgary, or in Tuktoyaktuk instead of Toronto, or even back in Hollywood where the film industry was born, so be it.

As for the psychic need of politicians to be near Hollywood film stars, perhaps they should just ask for an autograph from celebrities.

That would be cheaper for taxpayers than financing another Brad Pitt film.

 

Mark Milke is a senior fellow with the Fraser Institute and author of several studies on corporate welfare.

 

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